American International Group Inc. president and chief executive Martin Sullivan did not try to sugarcoat its 2007 results, which he called "clearly unsatisfactory."
"We are in uncharted waters," Mr. Sullivan said on a conference call Friday after the New York company, the nation's largest insurer, reported the biggest quarterly loss in its history.
He said he thinks the housing market will underperform for the rest of the year, forcing more writedowns at AIG.
AIG, which reported its results late Thursday, said it lost $5.29 billion, or $2.08 a share, in the quarter after taking an $11.12 billion pretax writedown on the value of insurance contracts tied to mortgages. For the year-earlier quarter it reported a profit of $3.44 billion, or $1.31 a share.
AIG said it lost more than $3 billion in its investment portfolio because of "significant, rapid declines" in the value of mortgage debt.
For the year AIG earned $6.2 billion, or $2.39 a share, versus $14.05 billion, or $5.36 a share, in 2006.
For the quarter, the general insurance division's profit fell 22%, to $2.02 billion, on steep losses at its mortgage insurance business, United Guaranty.
The life insurance division's profit fell 51%, to $1.29 billion.
KBW Inc.'s Keefe, Bruyette & Woods Inc. cut AIG shares to "market perform" from "outperform" early Friday.
Fitch Inc. announced late Thursday that AIG's credit ratings remained on "negative watch," with the possibility of downgrades.
